Tax the rich? Chicago mayoral hopefuls debate city budget

Ken Kunz used to know everyone in the North Side Chicago neighborhood where he's lived for more than 40 years. But crossing paths with old friends is rare these days because longtime residents have been pushed out by new development and soaring property taxes.

When they do meet, the 64-year-old says, they exchange the same greeting: “I'm so glad you're still here.”

Chicago has grown unaffordable for many working- and middle-class people like Kunz who have been “run over by development," as he put it. That's why he voted both in the February mayoral election and the upcoming runoff for Brandon Johnson, a former teacher and union organizer who has called for $800 million in new taxes on "the ultrarich."

“It seems like he is at least willing to represent someone who makes as much money as I do,” said Kunz, who operates his own delivery business and manages the property where he lives, which helps make rent manageable. “I just want as much representation as the developer who's building million-dollar condos around the corner from my house.”

How to balance Chicago's steep financial challenges with residents' concerns about the cost of living is among the many issues separating Johnson and Paul Vallas, the former schools CEO and onetime city budget director, before the April 4 runoff. The two Democrats advanced in last month's vote, outdistancing Mayor Lori Lightfoot.

Just as in many major cities, the debate over who should pay what in taxes has taken on increasing prominence post-pandemic. Some see this moment as a chance to rebuild the economy and ensure more equitable futures for residents, many of whom were struggling to get by even before COVID-19 hit. In Chicago, the task is complicated by concerns over violent crime, including homicide rates that spiked in recent years and have yet to return to pre-pandemic levels.

Johnson is a progressive who has been endorsed and heavily funded by the Chicago Teachers Union. He has the backing of Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., along with other lawmakers and groups that have long pushed a tax-the-rich agenda.

Vallas is supported by many business leaders, including groups such as the Chicagoland Chamber of Commerce and the Illinois Hotel and Lodging Association. He says he would rely on his budgeting expertise to find ways to cut spending and says Johnson's plan would hurt not just the wealthy but also businesses that provide jobs and industries the city needs to thrive.

"He’s imposing taxes that are going to pummel the economy at a time when we could possibly be drifting into recession,” Vallas said during a recent debate.

Chicago's fragile recovery is visible throughout the city.

Along the iconic shopping and tourist strip known as the Magnificent Mile, storefronts sit vacant, casualties of the pandemic, crime and retail trends that were moving away from in-person shopping even before COVID-19. In some areas, particularly in the city's predominantly Black neighborhoods, people have left, leaving blocks with boarded-up homes and empty lots.

There are some bright spots on the economic front. Google recently bought a state-owned building in the heart of the Loop to serve as a second headquarters. A long-sought casino was approved and will bring both jobs and revenue.

But Chicago is at a crossroads, dealing with historic inflation, skyrocketing property taxes and the lingering effects of the pandemic, said Jack Lavin, president and CEO of the Chicagoland Chamber of Commerce.

Lavin and other business leaders credited Vallas for his plan to address crime, a major concern among businesses. The union that represents Chicago police has endorsed Vallas, who wants to hire hundreds of officers, while Johnson has been criticized over past comments in support of “defunding” police — something Johnson insists he will not do. Johnson has called for investing more in areas such as youth jobs and mental health care rather than adding more officers.

“We need to do things that are going to encourage people to come back to the office, encourage people to get out and go to shows and conventions to come here, and tourism because that’s a big piece of our economy,” Lavin said.

Johnson says Chicago needs new revenue to offset a freeze on property taxes while investing in other areas, including housing and schools.

His plan includes reinstating a $4-a-month-per-employee “head tax” on large companies, charging big airlines “for polluting the air” in Chicago and taxing financial transactions made in the city. He also wants to impose a so-called mansion tax, or real estate transfer tax on high-end home sales, and increase the hotel tax.

Johnson described the additional hotel tax as an extra $1 per room that most people wouldn't notice. But Michael Jacobson, president of the Illinois Hotel and Lodging Association, said it could add up to serious damage for Chicago's bottom line because, without “palm trees or mountains,” most of the city's visitors come for conventions.

Jacobson that when convention planners are shopping around for host cities, an extra charge on large blocks of hotel rooms — on top of already higher-than-average lodging taxes — could mean those planners go elsewhere.

Johnson, who turns 47 on Monday, has criticized Vallas for not laying out how he would handle Chicago's budget deficit without increasing taxes on people who cannot afford it. Johnson has called the 69-year-old Vallas, who was budget director and Chicago schools CEO under then-Mayor Richard M. Daley, part of “the politics of old.”

“If he actually had a plan, he’d put forward a plan," Johnson said. “He’s not putting forward a budget plan because he’s going to raise your property taxes.”

Vallas says he would look at the city’s entire budget to find efficiencies and “work to avoid” taxes. The one thing he definitely wouldn't do, he said, is propose $800 million in taxes “right out of the box.”

Vallas, who also ran schools in New Orleans, Philadelphia and Bridgeport, Connecticut, says his experience makes him the better choice to handle the city's massive budget amid tumultuous times. He criticized Johnson, who serves on the Cook County Board of Commissioners, as lacking the experience needed for the job.

“Bottom line is, Brandon has run nothing," Vallas said.

But Kunz, the longtime North Side resident, said it's time for Chicago to try a new way forward. While the business community may support Vallas, Kunz doesn't think business has the best interest of the people of Chicago at heart. So, he figures, why not tax the rich?

“Who else are you going to tax, the average person making $40,000 or $50,000 a year? They're taxed out. They simply can't afford it," Kunz said. “Let's see what happens.”

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Associated Press writer Claire Savage contributed to this report.